February 22, 2012 02:55 AM UTC

So You're Paying Too Much For Gas, Are You?

•  
• by: Colorado Pols

Businessweek reports, and you ought to pay attention:

Gas prices are off to a fast start in 2012. The national average for a gallon of regular gasoline is up more than 8 percent since the end of 2011, rising from $3.25 per gallon to $3.52, according to new data released by the U.S. Energy Information Administration.

While gas prices tend to rise through the first half of the year, this is the earliest the average price per gallon has breached the $3.50 mark. [Pols emphasis] If this pace continues, the national average should hit $4 a gallon by May, if not sooner. The last time the average price did so in the U.S. was summer 2008, when the price of oil hit $140 a barrel…

Being an election year, it seems pretty likely that President Barack Obama and whatever it is he must be doing to raise the cost of gasoline is going to be brought to our attention hourly as soon as gas prices reach a politically useful level. Whether it’s denial of approval for the Keystone XL pipeline from Alberta, or not leasing federal land for energy development some time in the future at the pace the industry would prefer. Maybe oil shale…anyway, it’s certainly, at the end of the day, Barack Obama’s fault we’re going to pay all this money for gas this year. Right?

No, Josh Penry, not actually!

Strangely, the current run-up in prices comes despite sinking demand in the U.S. “Petrol demand is as low as it’s been since April 1997,” says Tom Kloza, chief oil analyst for the Oil Price Information Service. “People are properly puzzled by the fact that we’re using less gas than we have in years, yet we’re paying more.”

Kloza believes much of the increase is due to speculative money that’s flowed into gasoline futures contracts since the beginning of the year, mostly from hedge funds and large money managers. [Pols emphasis]

Reading about the present election-year runup in gas prices around the country–though Colorado gas prices remain lower than the national average–we couldn’t help but recall the story of California Gov. Gray Davis, as you may remember only the second sitting governor successfully recalled in American history. As the New York Times reported long ago:

Electricity traders at Enron drove up prices during the California power crisis through questionable techniques that company lawyers said ”may have contributed” to severe power shortages, according to internal Enron documents released today by federal regulators.

Within Enron, the documents show, traders used strategies code-named Fat Boy, Ricochet, Get Shorty, Load Shift and Death Star to increase Enron’s profits from trading power in the state — techniques that added to electricity costs and congestion on transmission lines…

The memos, which provide the first inside look at the complex trading strategies Enron used in California, give strong ammunition to state officials who have long argued that Enron and other power marketers manipulated the state’s market and played a crucial role in the crisis that cost California consumers and utilities tens of billions of dollars in 2000 and 2001.

The lessons of the California energy crisis of 2000-01 are a dim memory for most Americans, but one effect demonstrated by now-bankrupt Enron and other energy trading companies during that time was an ability to effect political change through market manipulation. Sure the billions of dollars in profits was the main goal. And yes, it took a few years, and Enron itself didn’t survive to see it. But California’s energy crisis claimed Gov. Gray Davis as a key victim–the voters of California blamed liberal Gov. Davis after the energy traders scammed them all.

Sorry, back to today’s story, which is the price of gas shooting up in a contentious election year, “due to speculative money,” even though demand is not shooting up! This is where we leave it all dangling for you. As responsible grownups, we’ll have no part in your conspiracy theories.